This unit is concerned with special procurement situations and decisions with capital equipment and services, which differ substantially from the procurement of production materials and supplies covered so far.
We will also look at make-or-buy strategic decisions that can impact significantly on an organisation’s competitive position.
Unit 5 is made up of three sections:
This section addresses the procurement’s role in the acquisition of capital equipment, the long-term assets that are not bought or sold in the regular course of business. They have an ongoing effect on the organisation’s operations and normally involve large sums of money.
This section discusses one of Procurement’s most challenging responsibilities — obtaining services. In no other area is there a more complex interdependency between the procurement description, method of compensation, source selection, contract administration and a satisfied customer.
This section looks at decisions on buying materials and components from suppliers instead of making them in-house and also buying materials or components that were previously made in-house. The strategic impact of the sourcing decisions on the firm’s competitive advantage. Finally we also explore the sourcing decision’s impact on a firm’s ability to utilise its productive resources.